One of the key considerations when purchasing a flat in Singapore is the cost to finance one. We all know buying a home here isn’t exactly cheap. So to help defray a part of the large cost, the government introduced CPF housing grants, which you can take up so as to take a load off your financial back. And it would seem the government has heard our cries about the cost of housing when it was announced in the Budget in 2017 that housing grants for buyers of resale apartments would increase.
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But what do you really know about CPF housing grants and what they can do for you? It may take weeks to
truly wrap our head around the many terms and conditions attached to them. And there are thankfully numerous articles out there that has already summarised beautifully the different schemes available. What we’ve decided to do here is therefore to dig out lesser known facts about CPF housing grants that you may not know about. Here are 5 of them:
1. You will need to return your CPF housing grants back to your CPF account
Hate to break it to you, but the CPF housing grants are not actually free money from the government. Here’s how they work: you accept the grant based on whatever category you fall into, the grant gets disbursed into your CPF Ordinary Account, and then you use it to offset the price for your flat.

BUT, the amount that was given as grant has to be returned back to your own CPF account when the property is sold. The proceeds from your sale of your flat will be used to pay off any outstanding mortgage loan. But it will also be used to return the grant that was used as well as the accrued interest, that is, the interest you would have earned had you not used the amount to pay for your housing. And interest gets accrued right from day one. If you look at it in another way, the grant essentially acts like a loan to yourself.
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Image courtesy of <a href="https://www.renonation.sg/professional/the-interior-lab/" target="_blank" rel="noopener noreferrer">The Interior Lab</a>
2. You may get more CPF housing grants buying a resale flat than a BTO
The changes to CPF housing grants that were announced in the Budget in 2017 were essentially this:
<ul>
 	<li style="text-align: left;">First-time families buying resale flats can enjoy up to $50,000 of housing grant if they’re buying a 4-room or smaller flat and up to $40,000 if they’re buying a 5-room or larger flat.</li>
 	<li style="text-align: left;">Singles buying resale flats can enjoy up to $25,000 in grants for those getting 4-room or smaller, and up to $20,000 if they’re getting 5-room and bigger.</li>
</ul>
The grant restrictions for buyers of resale flats are less strict, compared to those for BTO buyers, so you may be getting more grants if you’re buying a resale flat than a BTO. Here are two scenarios that illustrate this:

SCENARIO A:
A first-timer couple wishes to buy a 4-room flat in a mature estate. They have a monthly household income of $5,000. If they get a BTO flat, they will receive a total of $5,000 in Additional CPF Housing Grant (AHG). But if they choose to get a resale flat, they will receive $50,000 in Family Grant. To get the Family Grant, the remaining lease of the resale flat has to be at least 30 years. The couple can also apply for an AHG of $5,000 based on their combined income. And if they choose to live near their parents in the latter option, they will receive an additional $20,000 in Proximity Housing Grant.

SCENARIO B:
A first-timer couple wishes to buy a 5-room flat. Their monthly household income is $6,500. If they choose to get a BTO, they will not get a single grant as the AHG is only given to those with an income ceiling of $5,000 while the Special CPF Housing Grant (SHG) is given to those who purchase 4-room or smaller in a non-mature estate. However, if they choose to get a resale, they will be eligible to obtain a $40,000 in Family Grant, and an additional $20,000 if they choose to live near their parents.

In both scenarios, choosing to buy a resale apartment has led to significantly more housing grants than buying a BTO flat. But is this necessarily cheaper overall? It actually depends, as the purchase prices for BTOs are still heavily subsidised, while prices for resale flats are based on market forces. It’s also important to remember that resale flats tend to have a shorter lease. Make sure you do your calculations and factor in the time you can get your flat (a wait for a BTO is typically three to four years!) and the location of your flat to see whether a BTO or a resale is for you.

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Image courtesy of <a href="https://www.renonation.sg/professional/urban-habitat-design/" target="_blank" rel="noopener noreferrer">Urban Habitat Design</a>

3. Your CPF housing grant cannot be used to offset cash payments

You can only use the grant to offset the purchase price of the flat or to reduce the amount of mortgage loan required, at the start. So you can’t claim the grants and have them sit in your CPF account while you earn interest. It doesn’t quite work this way!

As mentioned earlier, it is disbursed directly into your CPF Ordinary Account and no cash disbursement is allowed. What this means it can’t be used to pay off your cash down payments. So if you’re taking a bank loan, it cannot be taken to pay off your mandatory 5% cash down payment.

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Image courtesy of <a href="https://www.renonation.sg/professional/fineline-design/" target="_blank" rel="noopener noreferrer">Fineline Design</a>

4. There are also grants for EC buyers

Looking to buy an EC? You are not left out. There are actually schemes available if you’re ineligible to get a BTO or if you aren’t a fan of resale units. Here’s the HDB <a href="http://www.hdb.gov.sg/cs/infoweb/residential/buying-a-flat/new/schemes-and-grants/cpf-housing-grants-for-ecs" target="_blank" rel="noopener noreferrer">link</a> to where you can get more information on the grants.

BUT! Unlike the CPF housing grants for BTOs and resale units, you will have to be in a family unit to obtain the grants. Sorry, single folks.

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5. The bulk of CPF housing grants are really only for first-time applicants

No, the grants are not for forever (or for every flat you purchase). Most of the grants are usually reserved for first-time applicants, that is, you have never received any housing grant for the purchase of an HDB flat.

However, if you’re a second time applicant (that is, you have received a housing grant before), there are several CPF housing grants you can still apply for even though there are several restrictions.

If you’re looking to get another BTO, you are eligible for a Step-Up CPF housing grant only if your previous flat was a public rental flat or your first 2-room subsidised flat in a non-mature estate. Plus, the flat that you can now buy and receive a grant for is for either a 2-room Flexi (if you previously were living in a public rental flat) or a new 3-room flat in a non-mature estate.

However, if you’re a second-timer applicant and getting another BTO with someone who is a first-timer applicant, you can obtain the AHG (Singles) and SHG (Singles) grants provided you fulfil the income ceiling criteria.

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Image courtesy of <a href="https://www.renonation.sg/professional/design-4-space/" target="_blank" rel="noopener noreferrer">Design 4 Space</a>

For buyers of resale flats, you can still get a grant even if you’re a second-timer applicant, provided you’re applying it with a first-timer. This falls under the Half-Housing Grant. If you previously received a Singles Grant as a single person and recently got married, you can also apply for a Top-Up Grant for your existing flat (that is now your matrimonial home) or a new resale flat.

The grant amount for Half-Housing is half the amount you would qualify for if you both were first-time applicants. The Top-Up Grant amount is the difference between the Family Grant that you now qualify for, minus the Singles Grant amount that you had previously received.

There is also a Step-Up housing grant if you're looking to buy a resale flat. Your current flat has to be either your first 2-room subsidised flat in a non-mature estate or a public rental flat. With the grant, you can only purchase either a 2-room (if you were previously living in a public rental flat) or a 3-room resale flat in a non-mature estate.

Confused yet? Feel free to hit back with comments/questions or put in your two cents.

5 Things You May Not Know About CPF Housing Grants

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